Unemployment Benefit Increases and Mortality

I examine the impact of mass layoffs on mortality and test whether unemployment insurance benefits provide protection against the negative impact of job loss. I use county-level data for all 50 US states and the District of Columbia from the National Center for Health Statistics and the Department of Labor. Using a difference-in-differences approach with state and year fixed effects, I estimate that a one percent increase in mass layoffs leads to a 0.35 percent increase in mortality. Males are more vulnerable to mass layoffs than females, black and hispanic workers are more vulnerable to mass layoffs than whites, and young and older workers respond less to a mass layoff than the rest of the working population. I also estimate that an increase in extended unemployment benefits has a protective effect on the increase in mortality due to mass layoffs. A thousand dollars per unemployed person increase in extended benefits reduces the mortality due to mass layoffs by 0.007 percent. In the context of sequestration, budget cuts, and the increasing scrutiny of federal expenditures, these results have policy implications regarding optimal allocation of funds as well as the optimal levels of benefit generosity. Unfortunately, I cannot rule out the possibility that my results are driven by time trends or omitted variables that are not able to be controlled for due to the limitations of the data. I am grateful to Lesley J. Turner my advisor for this project. I am also thankful to John Straub and Jeffery DeSimone for their guidance and support. Additionally, I benefited from helpful comments from seminar participants at the University of Maryland, College Park and Georgetown University's Carroll Round Conference. I would also like to thank the BLS Department of Mass Layoff Statistics who provided the data for this project as they were being phased out due to budget cuts, as well as Kim Hyunchung and Thomas Stengle from the Department of Labor who provided further detail on the Unemployment Insurance Data available on their website